If it's all about jobs, then surely part of any solution must involve the reduction and/or elimination of employment impediments.

Payroll tax (a topic we have written about in previous newsletters) is one major employment impost that was originally supposed to be rolled back with the extra revenue from GST. The Democrats (politicians) knocked that on the head (along with the abolition of a raft of other State taxes) when they removed GST from food.

Governments appear only to be interested in populist policies with the current tenants anti business in their approach.

Creating jobs is more than a cash handout, incentives to put insulation in rooves that most responsible citizens have already done and working on long awaited infrastructure projects.

What about employers in this country.

Keep more people in Australia, have a growing/thriving enterprise and cut down the barriers should be what politicians see as part of the solution.

Think about employers in this country, who they compete globally with and how they will compete in a world in financial crisis. Some politicians are talking about (buy Australian, buy French etc) being patriotic and looking after their own.

Currently our employers have additional imposts compared to our overseas counterparts.

Labour is about 18 times as expensive. Why? The work week is shorter. We have payroll taxes and pay 9% super. Then you have to pay 4 weeks leave a year (some still with a 17½% loading!) Then you have to pay workcover. Then you have to pay overtime. Then you have to pay allowances. So you start work and, if it's Monday, about a tenth of your workforce is away on a sickie, but you have to pay them anyway. Then to operate your business you have to pay and collect GST, collect PAYG for the government (unpaid of course) and complete government survey forms.

If you, despite all the odds, grow to have more than 25 staff, one of them has to become a workplace health and safety officer and comply with some strict OH&S legislation. If your business slows you cannot easily downsize your workforce because of the threat of legal action and excessive redundancy provisions. Then you may have the unions to deal with. Then there is the issue of business taxation. We are simply not playing on a level playing field!

Business and jobs (like Pacific Brands) will continue to go overseas unless some of these employment imposts are changed!

Tomorrow's wealth will be created in open markets by businesses competing on global playing fields.

Yet global competition should make us very concerned at the present cost of doing business in Australia. This is more critical than ever to decisions to establish an office or plant in Australia or alternatively to move an Australian plant offshore to places such as China or to outsource service functions to places such as India.

Yet more needs to be done, and rapidly, to reduce the cost of doing business if Australia is to emerge strongly from the global recession.

A 20 percent cut in payroll tax revenue by the states and territories would cost approximately $3 billion per annum. This would put a windfall gain in the hands of Australia's entrepreneurs to share with their workers through job creation or higher wages.(N.B. This assumes Australia's corporate braintrust spend these savings wisely and as outlined).

Payroll tax is not only one of the most punitive taxes on entrepreneurs, it is also one of the most regressive taxes on workers. Payroll tax is paid by medium and larger-sized employers on wages and as such reduces the incentives to hire or pay staff more. If this burden were reduced businesses could more easily afford to hire or pay better wages.

Major cuts in payroll tax have been elusive because it is one of the key revenue measures the states and territories have. Therefore, perhaps the commonwealth needs to pay incentives to the states to buy significant reductions (as a serious option).

One approach could be for the commonwealth to establish a fund of, say, $2 billion per annum that the states and territories can access. The commonwealth could pay the states and territories $2 for every dollar they reduce payroll tax, thereby creating major reductions and splitting the cost across the two tiers of government.

For example if, say, SA, one of the states with the least competitive payroll tax regimes, cut $200 million in payroll tax, then the commonwealth could help reduce the payroll tax burden by a further $400 million, an overall reduction in payroll tax revenue of $600 million.

This would ensure that payroll tax reductions were very significant without either the commonwealth or the state making the reduction being in a fiscally perilous deficit in the recession. If the federal and state governments worked together like this to help business and workers it would give real substance to ending the blame game.

The overall aim would be to reduce all state and territory payroll tax burdens by at least 20 per cent. If any state or territory chose not utilize the scheme, then they would be at a competitive disadvantage with their counterpart states as they reduce their payroll tax burdens.

This cut in payroll tax would assist most Australian businesses, from cheap and cheerful retailers to higher-end services and hi-tech manufacturing in global supply chains.

In addition to cutting payroll tax costs, moderate wage setting by the Fair Pay Commission in 2009 and beyond would also be important to maintaining good employment outcomes and the health of our business sector. It is vital that the commission take account of the wage pressure felt by businesses.

While some say the $900 cash payments announced in the stimulus package are a worthwhile injection into the economy, the Fair Pay Commission would be more likely to give a small uplift in award rates of pay in 2009 if there were permanent tax cuts as part of the plan. Again most would argue the bringing forward of these cuts would have provided better ongoing and lasting relief.

The proposal put forward by the Australian Industry Group of significantly increasing the Lower Income Tax Offset to $1,500 and raising the starting threshold for the 30 per cent tax rate to $37,000 per year for 2009-10 was an ideal policy setting for business and workers.

They estimated it costs ' only ' $2.75 billion per annum and cuts effective marginal tax rates while compensating for reductions in real incomes as the recession puts downward pressure on wages.

While these policies would cost the commonwealth around $4.75 billion per annum, this would be a major investment in entrepreneurial behavior in the real economy.

In the present climate reducing business costs is a statement that we are open for business and competing on the world stage. This is one of the greatest investments we can make in our long-term future.

Comment- Tony Martin - Director, Advantage One